The question of what constitutes a "securities claim" in the context of public company D&O policies is often debated in insurance coverage disputes, and the answer to this question can have significant effects on the scope of what insurance companies would be forced to cover under these policies. In In re Verizon Insurance Coverage Appeals, the Delaware Supreme Court reversed an earlier Superior Court ruling that, if upheld, would have considerably broadened that ... Keep Reading »
South Carolina Supreme Court’s Quiet Erosion of Insurers’ Attorney-Client Privilege Rights
One decision that flew under the radar in 2019 continues the recent trend of courts to dispense, under among other things the previously discussed “at-issue” waiver doctrine, with insurers’ fundamental rights to confidentiality with respect to legal advice. In the June 2019 decision In re Mt. Hawley Insurance Co., No. 2018-001170 (S.C. June 12, 2019), South Carolina directed, in response to a certified question from the Fourth Circuit Court of Appeals, the circumstances ... Keep Reading »
Connecticut Supreme Court Fortifies Crumbling Foundation Claim Denials in Trio of Insurer Victories
A year ago, we wrote about a rapidly emerging area of insurance litigation in Connecticut: crumbling foundations. As a quick recap, tens of thousands of homes in northeastern Connecticut built over a span of more than 30 years may have been constructed with defective concrete that causes basement walls to prematurely deteriorate and eventually become structurally unsound. The Crumbling Foundation Crisis The problem, known as alkali-silica reaction (ASR), is the result ... Keep Reading »
Eleventh Circuit Rejects Insurer-Defended Policyholder’s Bid to Expand Florida’s Bad Faith “Excess Judgment Rule” to Include Collusive Settlements Concocted Without Insurer’s Consent
In Cawthorn v. Auto-Owners Insurance Co., No. 18-12067 (11th Cir. Oct. 25, 2019), the Eleventh Circuit affirmed the U.S. District Court for the Middle District of Florida’s grant of summary judgment in favor of Auto-Owners Insurance Co., ruling that a consent judgment does not constitute an excess verdict, which is an essential element of a Florida bad faith claim. This appeal arose from an April 2014 underlying automobile accident in which David Cawthorn and Bradley ... Keep Reading »
Look No Further Than the Insuring Clause: Ill-Gotten Gains Do Not Constitute Covered “Loss”
On August 26, 2019, the Eleventh Circuit Court of Appeals, applying Florida Law, held that ill-gotten gains do not constitute covered “loss” within the meaning of a D&O policy. In Philadelphia Indemnity Insurance Co. v. Sabal Insurance Group, Inc., No. 17-14844 (11th Cir. Aug. 29, 2019), the Miami-Dade County Office of the Inspector General investigated Sabal Insurance Group and its CEO/president Ian Norris for overcharging the Miami-Dade Aviation Department for ... Keep Reading »
Seventh Circuit Finds “Based Upon or Arising Out of” Language in Contract Exclusion Renders Coverage “Illusory”
In Crum & Forster Specialty Insurance Co. v. DVO, Inc., No. 18-2571 (7th Cir. Sept. 23, 2019), the Seventh Circuit reversed a decision of the U.S. District Court for the Eastern District of Wisconsin, finding that the contractual liability exclusion in an E&O policy containing “based upon or arising out of” language rendered coverage under the policy “illusory” and therefore must be reformed to match the policyholder’s “reasonable expectations.” The appeal ... Keep Reading »
Court Finds Animals Incapable of Vandalism or Malicious Mischief for Insurance Purposes (and all other purposes, too)
I am willing to go out on a limb and say that if asked whether an animal, say, a raccoon, is capable of committing malicious criminal acts, most humans would agree that the issue is beyond dispute. But, alas, most humans would be wrong (apparently it very much can be disputed). There is good news, however. The nation’s courts have been quietly tackling the issue, and, thankfully, they have been able to allay any fear of a raccoon uprising occurring in the near future. A ... Keep Reading »
Appearance by Video Might Be More Convenient for a Nonparty in Arbitration, but It Can’t Be Compelled Under the FAA
You find yourself in an arbitration needing documents and testimony from a nonparty. Your arbitrator issues a nonparty summons, "conveniently" requiring the out-of-state nonparty to appear by video at a hearing and produce documents to the parties and the arbitrator in advance. As it goes, the nonparty objects to the summons, refusing to comply without an order compelling it to do so. So you move to enforce the arbitral summons in the district court in which the ... Keep Reading »
The Conflict Between Choice-of-Law Provisions in Insurance Policies and a State’s Fundamental Public Policy
Many contracts include a choice-of-law provision in which the parties agree to use a particular jurisdiction's set of laws to govern the contract. These provisions promote predictability. No matter where a dispute may arise under the contract, the contract will always be interpreted under the laws of the chosen jurisdiction. This practice of including choice-of-law provisions extends to policies of insurance. However, these choice-of-law provisions are not always ... Keep Reading »
New York Supreme Court Holds Documents Created By Counsel During Claims Handling Were Not Privileged
Pharmavite LLC filed a statement of loss under a policy issued by Crum & Forster Specialty Insurance Co. Crum & Forster disclaimed coverage, and Pharmavite commenced an action for breach of contract and declaratory judgment. After the parties disputed whether certain documents in Crum & Forster's privilege log were discoverable, the court conducted an in camera review and ordered Crum & Forster to disclose all documents. Crum & Forster moved to ... Keep Reading »
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